1. Simone, Joseph V. MD

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For 24 years after completing my training, I worked at St. Jude Children's Research Hospital. There were many appealing features that got me there: a young and vibrant institution, a great leader in Dr. Donald Pinkel, a congenial team of colleagues, an environment conducive to good medical care and investigation, and a systematic review of patient outcomes. But it had one additional feature that I did not fully appreciate until some years later. The medical care was provided free of charge to patients.

JOSEPH V. SIMONE, MD... - Click to enlarge in new windowJOSEPH V. SIMONE, MD, President of Simone Consulting (

At that time, there was no billing department and no insurance department. Although some years later the board of directors convinced Danny Thomas to accept insurance payment from those who had it (parents had urged us to do this), it was on the condition that no one would be asked if they had insurance before being admitted and no one would be billed for payment out of pocket. That policy is still in place today. Medical care is paid for largely with philanthropic donations.


Though my colleagues and I did not discuss this unusual situation very often, we certainly appreciated (and were proud of) our ability to accept patients without regard to socioeconomic status. We accepted patients because we had a protocol or expertise in their problem. Although we had leaner and fatter years over time, the St. Jude fundraising organization, ALSAC, always seemed to find the money to support our medical activities and studies. It was a rare privilege to work under those conditions.


I recalled this history as a result of reading a long list of articles on how to reduce the cost of health care. The most recent is, "Determining the Value of Drugs-The Evolving British Experience," in the April 7 issue of the New England Journal of Medicine The authors-Ruth R. Faden, PhD, MPH, and Kalipso Chalkidou, MD, PhD-are from the Berman Institute of Bioethics at Johns Hopkins and the International Division of Britain's National Institute for Health and Clinical Excellence (NICE).


NICE was established in 1999 to recommend (or not) the use of drugs in the National Health System based on comparative clinical-effectiveness and cost-effectiveness tools, such as quality-adjusted life years (QUALYs). Patients have a constitutional right to receive any recommended drug. NICE cannot deny or restrict access to drugs nor does it set drug prices. It is up to the patient's physician to decide whether to prescribe the drug.


In the 10% to 15% of cases in which it recommends against providing access to a drug because of poor cost effectiveness or clinical effectiveness, a stakeholder can appeal the decision and the decision may be overturned in that instance.


Transparency, Public Consultation, Independence, Contestability

Thus, the process has four bedrock features: transparency; public consultation; independence, and contestability. A variety of committees that include patient advocates, physicians, laypeople, and others gather public and expert opinion before making decisions.


But there are problems with this process, particularly when it comes to cancer chemotherapy.


The authors state, "Although Citizens Council members are selected from a stratified sample of the population, its views don't necessarily represent those of the rest of the public and rarely provide conclusive guidance on difficult issues[horizontal ellipsis].Eliciting information on what people value, bringing that information to bear on decisions, and evaluating the impact of those decisions have proved to be, respectively, challenging, difficult, and impossible. Recently, questions about funding expensive cancer drugs for terminally ill patients have posed the biggest challenge in NICE's approach."


'Value-Based Pricing'

The authors describe NICE's new approach to incorporating values: value-based pricing.


"It would begin with a basic price threshold expressed as the cost per QALY or other outcome metric, and retain NICE's central role" of pharmacologic assessments and providing advice to the National Health Service on relative clinical and cost effectiveness. Under this system, the Ministry of Health would negotiate prices with manufacturers, but prescribing decisions would be left to the family doctors who are given a capitation-based budget and need not follow particular decision-making processes.


The article goes on to describe some details that include a revision of the rules to be used by NICE for assessing value, changes in pricing, and the probable loss of the constitutional guarantee of access to drugs recommended by NICE.


I quoted this article at some length to provide a snapshot of the amount of energy being expended in the search of the "value" of various medical activities to find ways for lowering the cost of care and reducing wasteful treatments and diagnostics. This is true not only in Britain, but also in the US and Europe, though the British system is more developed.


These attempts to establish "values" for deciding what insurance should pay for are understandable. Rational, and preferably measurable, standards for health policy decisions are inherently attractive. Fairness, predictability, provider guidance, and economic prudence are desirable features for the application of public (or private) insurance payment standards.


But any experienced physician, particularly those who deal with potentially fatal conditions such as cancer, can attest to how notoriously difficult it is to apply such standards. In the case of NICE and the National Health Service (NHS) in Britain, the problem is punted to the physician who is the ultimate judge of what to prescribe.


That is a good news/bad news outcome. Doctors should be the ones to make judgments, but they are constrained by a capitated financial allowance from the NHS.


NICE has rediscovered, as we all do periodically, the fact that "values" are often more emotional than rational. They tend to vary widely among countries, communities, among family members, and among health care providers. Values are influenced by culture, socioeconomic status, and personal gain or loss. Also it often depends on whether it is the patients' or family members' values that are being applied.


This conundrum, taken to its ultimate length, raises the question of the value of life. We are often faced with assessing the value of a treatment that may extend life or may improve or worsen the quality of remaining life. Thus, the value is often based on speculation.


Despite these handicaps, the system in Britain works reasonably well, though it requires tweaking and refinements now and then. And the system apparently does save money.


Would the British System Work in the US?

Would this work in the US? The short answer is no. Key features of the British plan have little chance of being accepted here in the current economic and political climate.


First, the NHS negotiates the price of drugs directly with drug companies; US law forbids Medicare and Medicaid to do the same. Second, the NHS sets capitation limits on expenditures for drugs and care; in the US there are no capitation limits for private practices.


Without those two constraints, I doubt that the NICE and the NHS in Britain would be successful.


The closest we come to such a model in the private sector is within large multi-specialty groups such as the Permanente Medical Groups, Geisinger Clinic, and Mayo clinic. In each case, internal reviews and standards are used to achieve a desirable, flexible, and difficult balance between values and cost. They also have physician governance, are relatively free of industry propaganda, and they measure outcomes of past decisions with course corrections if warranted by data. All physicians in those settings have a stake in a system appropriate for each specialty. Perhaps we are headed in that direction.


More and more physicians in the US are choosing to become salaried employees of large multi-specialty groups or health systems due to (1) the rising financial and emotional costs of running a small business, (2) the emerging necessity for using electronic record systems, (3) the increasing need to demonstrate "quality outcomes," (4) a desire to spend more time at the bedside rather than on the phone with payers, and (5) oftentimes, a better quality of home life.


This non-governmental trend in the physician workforce may prove to be more palatable and effective in lowering costs and raising quality in the Land of the Free.